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2024 (10) TMI 1645 - SC - Indian LawsDishonour of Cheque - legally enforceable debt or not - rebuttal of presumption under Sections 118 and 139 of NI Act by probable defence - HELD THAT - From the order impugned it is clear that though the contention of the petitioners was that the said amounts were given for producing a film and were not by way of return of any loan taken which may have been a probable defence for the petitioners in the case but rightly the High Court has taken the view that evidence had to be adduced on this point which has not been done by the petitioners. Pausing here the Court would only comment that the reasoning of the High Court as well as the First Appellate Court and Trial Court on this issue is sound. Just by taking a counter-stand to raise a probable defence would not shift the onus on the complainant in such a case for the plea of defence has to be buttressed by evidence either oral or documentary which in the present cases has not been done. Moreover even if it is presumed that the complainant had not proved the source of the money given to the petitioners by way of loan by producing statement of accounts and/or Income Tax Returns the same ipso facto would not negate such claim for the reason that the cheques having being issued and signed by the petitioners has not been denied and no evidence has been led to show that the respondent lacked capacity to provide the amount(s) in question. The High Court has also rightly observed that even assuming the petitioners and the complainant engaged together in film production and were in the course of jointly producing a film the fact that the transaction occurred as a joint investment has not been substantiated by the petitioners before the Courts. In this background the onus to first prove as to how the amount that is said to have been given by the complainant to the petitioners could have been given would not be fatal as receipt of the amount(s) has not been denied much less disputed by the petitioners. In this regard specifically a suggestion given to the GPA-holder of the complainant i.e. PW1 that the complainant and petitioners were engaged in film production has been emphatically denied by PW1. Conclusion - There are no error in the High Court opining that in the backdrop of emphatic denial by PW1 with regard to any joint deal/venture with the petitioners in film production and acceptance and non-rebuttal of receipt of Rs.41, 28, 000/- the onus would not shift on the complainant and would remain on the petitioners to prove that such receipt of money was not with regard to repayment of an amount legally due to the complainant. In fact the accused have not been able to dislodge the statutory presumption under Section 139 of the Act. Petition dismissed.
ISSUES PRESENTED and CONSIDERED
The core legal issues considered in this judgment include:
ISSUE-WISE DETAILED ANALYSIS 1. Legally Enforceable Debt under Section 138 of the Negotiable Instruments Act Relevant Legal Framework and Precedents: Section 138 of the Negotiable Instruments Act criminalizes the dishonor of a cheque for insufficiency of funds, provided the cheque was issued for the discharge of a legally enforceable debt or liability. The presumption under Section 139 is that the holder of a cheque received it for the discharge of such a debt. Court's Interpretation and Reasoning: The Court upheld the High Court's view that the petitioners failed to provide evidence to support their claim that the cheques were issued for a joint film production venture, rather than a loan. The Court emphasized that merely raising a counter-stand does not shift the burden of proof back to the complainant. The presumption under Section 139 remains unless effectively rebutted by the accused. Key Evidence and Findings: The petitioners did not deny receiving the sum of Rs.41,28,000 but claimed it was for a joint film production. However, they failed to provide evidence to substantiate this claim. The cheques were issued and signed by the petitioners, and no evidence was presented to demonstrate that the complainant lacked the capacity to lend the amount. Application of Law to Facts: The Court applied the legal presumption under Section 139, which remained unrebutted due to the lack of evidence from the petitioners. The issuance and dishonor of cheques were sufficient to invoke the presumption of a legally enforceable debt. Treatment of Competing Arguments: The petitioners argued that the money was for a failed film project, not a loan. The Court found this defense unsubstantiated due to the absence of supporting evidence, such as joint venture agreements or accounts. Conclusions: The Court concluded that the cheques were issued for a legally enforceable debt, and the petitioners failed to rebut the presumption under Section 139. 2. Rebuttal of Presumption under Sections 118 and 139 Relevant Legal Framework and Precedents: Section 118 provides a presumption of consideration for negotiable instruments, and Section 139 presumes the discharge of a debt or liability. These presumptions are rebuttable by the accused. Court's Interpretation and Reasoning: The Court referenced the decision in Tedhi Singh v Narayan Dass Mahant, emphasizing that the accused must provide evidence to rebut the presumption of a legally enforceable debt. The burden of proof lies with the accused to demonstrate the non-existence of such a debt. Key Evidence and Findings: The petitioners failed to provide any documentary or oral evidence to support their defense. The complainant's denial of a joint film production venture was not effectively challenged. Application of Law to Facts: The Court found that the petitioners did not meet the burden of proof required to rebut the statutory presumptions. The absence of evidence supporting their defense led to the conclusion that the presumptions remained intact. Treatment of Competing Arguments: The petitioners' argument about the film production venture was not substantiated with evidence, and the statutory presumptions were not rebutted. Conclusions: The Court held that the statutory presumptions under Sections 118 and 139 were not rebutted, and the cheques were presumed to be issued for a legally enforceable debt. 3. Concurrent Sentencing Relevant Legal Framework and Precedents: Section 31 of the Criminal Procedure Code allows for discretion in ordering sentences to run concurrently or consecutively. The Court referenced precedents such as Mohd. Akhtar Hussain v Assistant Collector of Customs and V K Bansal v State of Haryana regarding concurrent sentencing. Court's Interpretation and Reasoning: The Court exercised judicial discretion to order concurrent sentences, considering the offenses arose from the same transaction and involved the same parties. Key Evidence and Findings: The offenses were related to the same transaction involving dishonored cheques, and the Court found it appropriate to order concurrent sentences. Application of Law to Facts: The Court applied the principle of concurrent sentencing to the facts, given the commonality of the transaction and the parties involved. Treatment of Competing Arguments: The Court did not find any compelling reason to deviate from the principle of concurrent sentencing in this case. Conclusions: The Court ordered the sentences to run concurrently, reflecting the nature of the offenses and the transactions involved. SIGNIFICANT HOLDINGS The Court held that the petitioners failed to rebut the presumption of a legally enforceable debt under Sections 118 and 139 of the Negotiable Instruments Act. The cheques were issued for the discharge of such a debt, and the statutory presumption remained intact. The Court also exercised discretion to order concurrent sentencing for the offenses, given their relation to the same transaction. Verbatim Quotes: "The NI Act provides for two presumptions: Section 118 and Section 139. Section 118 of the Act inter alia directs that it shall be presumed, until the contrary is proved, that every negotiable instrument was made or drawn for consideration. Section 139 of the Act stipulates that 'unless the contrary is proved, it shall be presumed, that the holder of the cheque received the cheque, for the discharge of, whole or part of any debt or liability.'" "The basic rule of thumb over the years has been the so-called single transaction rule for concurrent sentences. If a given transaction constitutes two offences under two enactments generally, it is wrong to have consecutive sentences. It is proper and legitimate to have concurrent sentences." The petition was dismissed, and the sentences were ordered to run concurrently. The petitioners were directed to surrender to serve the remaining period of their sentence, and the compensation amount was to be recovered as a public debt if not paid within six months.
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